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Despite the Debtor's Mishaps Bankruptcy Court Grants Stay

Posted By admin || 2-Sep-2009

In the bankruptcy case of (DiGiovanni, Peter W.; In re), the bankruptcy court grants a debtor's motion to impose stay despite several mishaps that nearly landed him in jail.

The details of the bankruptcy case:

After the debtor (who is also a non-bankruptcy lawyer) was removed as the executor of the estate, the state court found the debtor in contempt of court because he failed to turn over the estate records to the new executor.   The debtor was ordered to pay $29,279 by the state court.  A few days later the debtor filed Chapter 7 bankruptcy ; but the case was dismissed because he failed to obtain prepetition credit counseling.  Of course, the debtor also failed to pay the $29,279 and the state court issued a bench warrant for his arrest.

One week later the debtor filed for bankruptcy again, this time with the credit counseling certificate before for postpetition, which is WRONG--he needed prepetition credit counseling, not postpetition.  Because of this, the 2nd bankruptcy case was dismissed.  This debtor engaged in several more fumbles with his bankruptcy filing until finally he had to plead with the bankruptcy court to impose the stay or he would be facing jail. The bankruptcy court agreed to reimpose the automatic stay because not doing so would threaten to cause damage to the debtor that would outweigh the damage caused to the new estate executor who did not receive the estate records.

The court said:

"Although the debtor unquestionably made some errors in representing himself, those problems have been resolved and the Second Case appears to be on track to be completed smoothly and ex­peditiously," the court said, adding that if the stay was not imposed, the debtor was subject to a real risk of arrest. "That risk threatens injury to the debtor that outweighs the detriment the Demkos will suffer if their debt collec­tion efforts are deferred until the dischargeability of the debt is determined."


This is the type of flexibility that makes the bankruptcy system work so well.  Bankruptcy is a complex process and debtors are bound to make mistakes especially if they attempt to represent themselves.

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